International exploration has changed dramatically in the past 20 years. Advances in the industry’s collective understanding of petroleum fiscal terms and system analysis outpace setbacks. However, the science of fiscal system analysis and design is probably 50 years behind the science of reservoir engineering. Why? What’s the big deal? Setbacks?
Fiscal terms worldwide have evolved now to the point that they are nearly unbearable—they are too tough. This is because of decades of hyper-competition and overzealous bidding. The key reasons are discussed and the implications. Every year numerous countries announce improvements to their terms but these are usually a case of “too little too late”. Minor changes to fiscal terms have taken place as the basins mature dramatically. What does this mean? What can be done? Where are we going?